Property Valuation
What is the principle of substitution in real estate appraisal?
AA buyer will pay no more for a property than the cost of acquiring an equally desirable substitute✓ Correct
BSimilar properties should sell for similar prices in the same market
CThe value of one property is enhanced by the presence of better properties nearby
DValue is created by the expectation of future benefits
Explanation
The principle of substitution holds that a rational buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. This underpins all three approaches to value.
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